The weeks and months following the birth of a child can be hectic, filled with many questions and preparations for the child's future.
One question many parents may not think of is, "At what age should I start a college savings plan?" Though it may seem early to begin thinking of college, financial advisors say parents should begin thinking about starting a plan as soon as possible - even as early as when pregnancy is confirmed.
Peter Holloway, senior vice president at Hazlett, Burt and Watson in Wheeling, said starting a college savings plan early allows for several years of interest to compound and allow for the account to actually make money instead of simply being a holding tank.
Financial analysts suggest starting a college savings plan for children as soon as possible, with many options available to promote growth and interest within an account.
"If done right, it can be extraordinary," he said.
Holloway said the best plan available for college savings is a 529 plan, which allows for the money put into the account to appreciate without tax ramifications. By putting a minimum of $25 per month into the plan, the individual receives many breaks, including the opportunity to have the amount deducted from state taxes and the ability to withdraw it tax free when the time comes.
The money placed in a 529 account can only be withdrawn for approved college expenses, which includes room and board, tuition and other expenses. Holloway said the advantage of the plan is that even if the account is started with a particular child in mind, the owner of the account can use it for educational needs as he or she sees fit.
"If you have three children and one gets a scholarship, that money can be directed to other siblings," he said. "If the owner of the account wants to return to school, they can use the money themselves."
Holloway said the plan also is a great option for grandparents or other close family and friends who want to contribute to a child's future.
Instead of large sums of cash given as gifts for birthdays and holidays, Holloway said many are now choosing to make contributions to these accounts.
"The major benefit is that once a child reaches that college age, there is a nice chunk of change waiting," he said.
"The key is starting early."